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Caveat Vendor

The Gift that Keeps on Giving: FTC Settles with Additional Text Marketers in Ongoing Gift Card Enforcement Sweep

Last week the Federal Trade Commission (FTC) added a new settlement to a string of recent victories in its year-long campaign against marketers that have allegedly used deceptive practices in sending text messages that promise “free” gift cards and other valuable merchandise. The two marketing firms at issue in last week’s settlement, CPA Tank, Inc. and Eagle Web Assets, Inc., were accused of paying affiliates to send text messages promoting supposedly free merchandise, such as $1,000 gift cards to major retailers, such as Wal-Mart and Best Buy.  According to the FTC, recipients of the texts who clicked on the links embedded in the messages did not receive the advertised gift cards; instead, they were diverted to websites that sought sensitive personal information.

As part of the settlement, the two marketers agreed to turn over $30,000 in cash plus the proceeds from the sale of their luxury vehicles as partial satisfaction of the $200,000 judgment imposed by the settlement.  (The remainder of the judgment was suspended because of the marketers’ financial conditions.)  Beyond the monetary penalty, the settlement prohibits the marketers from making misrepresentations in future marketing efforts and from transmitting any unauthorized or unsolicited commercial text messages to mobile phones or wireless devices.  Under the terms of the settlement, the two marketers must also disclose all material terms and conditions in future marketing efforts. 

Last week's settlement follows on the heels of a $2.5 million settlement with a group of marketers targeted in FTC's March 2013 enforcement sweep.

Caveat Vendor is Paul Hastings' Consumer Issues blog. We welcome your feedback. Please contact our blog editor with any thoughts or suggestions.